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PBOC lowers China 2015 GDP, CPI growth forecasts

Researchers with China's central bank have revised down their forecasts for the country's economic growth and consumer inflation for 2015, citing increased downward pressure on economic growth.

They now forecast China's economy will expand 7%, slightly lower than a projection of 7.1% made six months ago, the People's Bank of China said in a report posted on its website Tuesday.

The report also lowered the forecast for this year's consumer inflation to 1.4% from 2.2%.

The mid-year report was written by a group of researchers led by Ma Jun, chief economist of the PBOC.

Growth industrial production, exports, investment in property and manufacturing have all been below expectations, they said. Long-term industrial deflation will likely affect consumer inflation, they added.

Some banks have become more cautious about extending credit, especially to sectors with overcapacity, including export firms and property developers, the report said.

Meanwhile, some companies are unwilling to invest, and demand for loans is relatively weak, the researchers said.

Beijing set a target of keeping economic growth at about 7% this year. China's economy grew at 7.0% in the first quarter, the slowest in six years.

China's consumer-price index rose 1.2% in May from a year earlier, slower than a 1.5% year-on-year rise in April, the National Bureau of Statistics said Tuesday.

May's figure was the lowest in four months and well within Beijing's target of keeping consumer inflation below 3% this year, renewing concerns about deflationary pressure in the world's No. 2 economy.

Economic growth will likely accelerate modestly in the second half of the year as the government steps up efforts to spur growth, the central bank said in the report.

The central bank has cut interest rates three times since November to spur domestic demand and trim borrowing costs. Beijing has stepped up infrastructure spending, offered more tax breaks and reduced red tape to lift growth.

The PBOC also said in Tuesday's report that prospect for interest-rate rises in the U.S. will likely have "limited" direct impact on China, as it has vast foreign-exchange reserves and its current account remains in surplus.

It now expects the current account surplus to be 2.9% as of the country's gross domestic product in 2015. It previously expected it to be 2.4%.